SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-15726
SUMMIT TAX EXEMPT L.P. II
(Exact name of registrant as specified in its charter)
Delaware 13-3370413
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
625 Madison Avenue, New York, New York 10022
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 421-5333
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
SUMMIT TAX EXEMPT L.P. II
(a limited partnership)
STATEMENTS OF FINANCIAL CONDITION
(unaudited)
<TABLE>
<CAPTION>
=========== ===========
March 31, December 31,
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
Participating first mortgage bonds-at fair value $148,130,039 $148,123,426
Temporary investments 3,300,000 3,600,000
Cash and cash equivalents 1,114,246 249,192
Interest receivable, net 530,330 735,343
Promissory notes receivable, net 242,389 275,572
Deferred bond selection fees, net 1,758,762 1,804,942
Due from affiliates 0 84,225
Other assets 11,178 23,775
------------ ------------
Total assets $155,086,944 $154,896,475
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Deferred income $ 384,319$ 394,259
Accrued expenses 80,766 107,421
Due to affiliates 404,944 72,194
------------ ------------
Total liabilities 870,029 573,874
------------ ------------
Contingencies
Partners' capital (deficit):
BUC$holders (9,151,620 BUC$
issued and outstanding) 160,518,891 160,622,463
General Partners (186,374) (184,260)
Net unrealized loss on participating
first mortgage bonds (6,115,602) (6,115,602)
------------ ------------
Total partners' capital 154,216,915 154,322,601
------------ ------------
Total liabilities and partners' capital $155,086,944 $154,896,475
============ ============
</TABLE>
See accompanying notes to financial statements
2
<PAGE>
SUMMIT TAX EXEMPT L.P. II
(a limited partnership)
STATEMENTS OF INCOME
(unaudited)
<TABLE>
<CAPTION>
=======================
Three Months Ended
March 31,
-----------------------
1997 1996
-----------------------
<S> <C> <C>
REVENUES:
Interest income:
Participating first mortgage bonds $2,717,025 $2,880,553
Temporary investments 32,292 30,165
Promissory notes 7,830 4,324
---------- ----------
Total revenues 2,757,147 2,915,042
---------- ----------
EXPENSES:
Management fees 202,656 202,656
Loan servicing fees 99,940 100,774
General and administrative 86,076 79,749
Amortization of deferred
bond selection fees 46,180 46,180
---------- ----------
Total expenses 434,852 429,359
---------- ----------
Net Income $2,322,295 $2,485,683
========== ==========
ALLOCATION OF NET INCOME:
BUC$holders $2,275,849 $2,435,969
========== ==========
General Partners $ 46,446 $ 49,714
========== ==========
Net Income per BUC $ 0.25 $ 0.27
========== ==========
</TABLE>
See accompanying notes to financial statements
3
<PAGE>
SUMMIT TAX EXEMPT L.P. II
(a limited partnership)
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(unaudited)
<TABLE>
<CAPTION>
Net Unrealized
Loss on
General Participating First
Total BUC$holders Partners Mortgage Bonds
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Partners' capital (deficit) -
January 1, 1997 $154,322,601 $160,622,463 $ (184,260) $(6,115,602)
Net Income 2,322,295 2,275,849 46,446 0
Distributions (2,427,981) (2,379,421) (48,560) 0
------------ ------------ ---------- -----------
Partners' capital (deficit) -
March 31, 1997 $154,216,915 $160,518,891 $ (186,374) $(6,115,602)
============ ============ ========== ===========
</TABLE>
See accompanying notes to financial statements
4
<PAGE>
SUMMIT TAX EXEMPT L.P. II
(a limited partnership)
STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1997 1996
----------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Interest received, net $2,945,608 $2,900,520
Amount received which was due from affiliate 84,225 0
Fees and expenses paid (69,981) (165,025)
---------- ----------
Net cash provided by operating activities 2,959,852 2,735,495
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net sale (purchase) of temporary investments 300,000 (1,000,000)
Principal payments received from loans made
to properties 33,183 8,233
---------- ----------
Net cash provided by (used in) investing activities 333,183 (991,767)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions paid (2,427,981) (2,427,981)
---------- ----------
Net increase (decrease) in cash and cash equivalents 865,054 (684,253)
Cash and cash equivalents at beginning of period 249,192 972,889
---------- ----------
Cash and cash equivalents at end of period $1,114,246 $ 288,636
========== ==========
SCHEDULE RECONCILING NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Net income $2,322,295 $2,485,683
---------- ----------
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of deferred bond selection fees 46,180 46,180
Accretion of deferred income (16,553) (16,553)
Changes in:
Interest receivable, net 205,013 2,031
Promissory notes receivable, net 0 21,620
Other assets 12,597 12,498
Accrued expenses (26,655) (42,239)
Deferred income 0 (21,620)
Due from affiliates 84,225 0
Due to affiliates 332,750 247,895
---------- ----------
Total adjustments 637,557 249,812
---------- ----------
Net cash provided by operating activities $2,959,852 $2,735,495
========== ==========
</TABLE>
See accompanying notes to financial statements
5
<PAGE>
SUMMIT TAX EXEMPT L.P. II
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(unaudited)
NOTE 1 - General
These financial statements have been prepared without audit. In the opinion
of management, the financial statements contain all adjustments, (consisting of
only normal recurring adjustments) necessary to present fairly the financial
position of Summit Tax Exempt L.P. II (the "Partnership") as of March 31, 1997,
and the results of its operations and its cash flows for the three months ended
March 31, 1997 and 1996. However, the operating results for the interim periods
may not be indicative of the results expected for the full year.
Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted accounting
principles have been omitted. It is suggested that these financial statements be
read in conjunction with the financial statements and notes thereto included in
the Partnership's Annual Report on Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 1996.
NOTE 2 - Participating First Mortgage Bonds ("FMBs")
The Partnership accounts for its investments in the FMBs as "available for
sale" debt securities under the provisions of Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" ("SFAS 115"). Accordingly, investments in FMBs are carried at their
estimated fair values, with unrealized gains and losses reported in a separate
component of partners' capital.
Because the FMBs are not readily marketable, the Partnership estimates fair
value for each bond as the present value of its expected cash flows using a
discount interest rate for comparable tax-exempt investments. This process is
based upon projections of future economic events affecting the real estate
collateralizing the bonds, such as property occupancy rates, rental rates,
operating cost inflation and market capitalization rates, and upon determination
of an appropriate market rate of interest, all of which are based on good faith
estimates and assumptions developed by the Partnership's management. Changes in
market conditions and circumstances may occur which would cause these estimates
and assumptions to change, therefore, actual results may vary from the estimates
and the variance may be material.
Effective January 1, 1997, forbearance agreements with respect to the
Suntree and Players Club FMBs were modified and extended due to a continuous
weak rental market and to ensure real estate tax payments and capital
improvements are made. Pursuant to the modification, the minimum pay rate for
Suntree was reduced to 6.5% and 7.5% for the periods January 1, 1997 through
June 30, 1997, July 1, 1997 through December 31, 1997, respectively. Thereafter,
the stated rate is to be reinstated. The minimum pay rate for Players Club was
reduced to 6.5% and 6.25% for the periods January 1, 1997 through January 31,
1997 and February 1, 1997 through December 31, 1997, respectively. Thereafter,
it is expected that the stated rate of 8% will be reinstated.
6
<PAGE>
SUMMIT TAX EXEMPT L.P. II
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(unaudited)
NOTE 2 - Participating First Mortgage Bonds ("FMBs") (continued)
With respect to the Highland Ridge FMB, and pursuant to terms of the
forbearance agreement, the developer has paid the first and second of three
annual installments towards the payment of delinquent taxes.
Effective as of January 30, 1997, pursuant to the terms of a forbearance
agreement entered into in August 1995, the obligor of the Sunset Downs FMB
transferred the deed to the underlying property to an affiliate of the Related
General Partner, who made no equity investment in the property but assumed the
day-to-day responsibilities of operations and obligations under the FMB.
With respect to the Sunset Downs FMB, the Partnership paid certain insurance
premiums on January 31, 1997 in the amount of approximately $92,000 as a result
of the forbearance agreement and transfer of the deed to the underlying property
to an affiliate of the Related General Partner. This loan was recorded in
operating income as a reduction of interest income from participating first
mortgage bonds because the Sunset Downs FMB is paying interest on a cash flow
basis.
A forbearance agreement with the owner of the Cedar Pointe property was
executed on February 1, 1997, which provided for a minimum pay rate of 7% per
annum effective September 16, 1996. Pursuant to the terms of the forbearance
agreement, it is envisioned that the FMB will be formally and permanently
modified to provide for a new base interest rate of 7% and a contingent interest
rate of up to 5% payable from 25% of cash flow or sale or refinancing proceeds.
In addition, the FMB modification will call for the discharge of accrued and
unpaid primary contingent interest, primary deferred interest, supplemental
contingent interest, supplemental deferred interest and construction period
deferred and contingent interest through September 15, 1996, whether payable
before, on, or after September 15, 1996. It is further expected that maturity of
the FMB will be extended to 2017 and the call date extended to 2006.
With respect to the FMBs which are subject to forbearance agreements with
the respective obligors, the difference between the stated interest rates and
the rates paid (whether deferred and payable out of available future cash flow
or, ultimately, from sale or refinancing proceeds) on FMBs is not accrued for
financial statement purposes. The accrual of interest at the stated interest
rate will resume once a property's ability to pay the stated rate has been
adequately demonstrated. Unrecorded contractual interest income was
approximately $449,000 and $325,000 for the three months ended March 31, 1997
and 1996, respectively.
The cost basis of the FMBs at March 31, 1997 and December 31, 1996 was
$154,245,641 and $154,239,028, respectively. The net unrealized loss on FMBs
consists of gross unrealized gains and losses of $951,666 and $7,067,268,
respectively, at both March 31, 1997 and December 31, 1996.
7
<PAGE>
SUMMIT TAX EXEMPT L.P. II
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(unaudited)
NOTE 2 - Participating First Mortgage Bonds ("FMBs") (continued)
Descriptions of the FMBs owned by the Partnership at March 31, 1997 are
as follows:
<TABLE>
<CAPTION>
Annualized
Interest Rate
Paid for the
three months Minimum Carrying
ended Pay Rate at Stated Amount at
March 31, March Interest Maturity March
Property Location 1997* 31, 1997* Rate* Call Date Date Face Amount 31, 1997 (G)
- - ---------- ---------- ------------ ----------- -------- --------- -------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bay Club Mt. Pleasant, SC 7.57%(D) 8.25%(D) 8.25% Sept. 2000 Sept.2006 $ 6,400,000 $ 6,141,201
Loveridge Contra Costa, CA 5.17 (B) 8.00 Nov. 1998 Nov. 2006 8,550,000 6,826,198
The Lakes Kansas City, MO 4.87 4.87 4.87 Dec. 2006 Dec. 2006 13,650,000 10,101,816
Crowne Pointe Olympia, WA 8.00 8.00 8.00 Dec. 1998 Dec. 2006 5,075,000 5,322,225
Orchard Hills Tacoma, WA 8.00 8.00 8.00 Dec. 1998 Dec. 2006 5,650,000 5,842,439
Highland Ridge St. Paul, MN 7.25 7.25(F) 8.00 Feb. 1999 Feb. 2007 15,000,000 12,971,183
Newport Village Tacoma, WA 8.22 (C) 8.00 8.00 Jan. 1999 Jan. 2007 13,000,000 12,843,816
Sunset Downs Lancaster, CA 4.33 (B) 8.00 May 1999 May 2007 15,000,000 11,306,665
Willow Creek Ames, IA 8.00 8.00 8.00 Oct. 1999 Oct. 2006 6,100,000 6,019,067
Cedar Pointe Nashville, TN 7.00 7.00 7.00 Apr. 1999 Apr. 2007 9,500,000 8,423,412
Shannon Lake Atlanta, GA 6.00 6.00(F) 8.00 Jun. 1999 Jun. 2007 12,000,000 10,920,358
Bristol Village Bloomington, MN 8.38(C)(E) 8.00 8.00 Jun. 1999 Jun. 2005 17,000,000 17,254,892
Suntree Ft. Myers, FL 6.84 6.50(F) 8.00 Jul. 1999 Jul. 2007 7,500,000 7,387,848
River Run Miami, FL 8.00 8.00 8.00 Aug. 1999 Aug. 2007 7,200,000 7,457,110
Pelican Cove St. Louis, MO 7.50 (B) 8.00 Feb. 1999 Feb. 2007 18,000,000 16,907,362
Players Club (A) Ft. Myers, FL 6.42 6.25(F) 8.00 Aug. 1999 Aug. 2007 2,500,000 2,404,447
------------ ------------
$162,125,000 $148,130,039
============ ============
*The annualized interest rate paid represents the interest recorded by the
Partnership while the stated interest rate represents the coupon rate of the FMB
and the minimum pay rate represents the minimum rate payable pursuant to the
applicable forbearance agreements, if any.
(A) Summit Tax Exempt L.P. III, of which the general partners are either
the same or affiliates of the General Partners of the Partnership,
acquired the other $7,200,000 of the Players Club FMB.
(B) Pay rate is based on net cash flow generated by operations of the
underlying property.
(C) Includes receipt of deferred base interest related to prior periods.
(D) The minimum pay rate on the FMB increased in increments from 6.0% in
1990 to 8.25% in 1997. The actual pay rate is adjusted as of the
property's fiscal year-end based on audited financial statements to no
less than the minimum pay rate.
(E) Includes receipt of primary contingent interest related to prior periods.
(F) The minimum pay rate on the FMB is scheduled to increase to the stated
interest rate over the remaining term of the FMB.
(G) The FMBs are carried at their estimated fair value at March 31, 1997.
</TABLE>
8
<PAGE>
SUMMIT TAX EXEMPT L.P. II
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(unaudited)
NOTE 3 - Related Parties
Prudential-Bache Properties, Inc. ("PBP") and the Related General Partner
(collectively, the "General Partners") and their affiliates perform services for
the Partnership which include, but are not limited to: accounting and financial
management; registrar, transfer and assignment functions; asset management;
investor communications; printing and other administrative services. The General
Partners and their affiliates receive reimbursements for costs incurred in
connection with these services, the amount of which is limited by the provisions
of the Agreement of Limited Partnership (the "Partnership Agreement"). The costs
and expenses were:
Three Months Ended
March 31,
----------------------
1997 1996
--------- ---------
PBP and affiliates:
Management fee $ 101,328 $ 101,328
General and administrative 17,446 11,172
--------- ---------
118,774 112,500
--------- ---------
Related General Partner and affiliates:
Management fee 101,328 101,328
Loan servicing fees 99,940 100,774
General and administrative 12,309 24,000
--------- ---------
213,577 226,102
--------- ---------
$ 332,351 $ 338,602
========= =========
An affiliate of the Related General Partner receives loan servicing fees
(see above) in an amount of .25% per annum of the principal amount outstanding
on FMBs serviced by the affiliate.
The General Partners are paid, in the aggregate, an annual management fee
(see above) equal to .5% of the original amount invested invested in FMBs.
During January and February of 1996, a division of Prudential Securities
Incorporated ("PSI"), an affiliate of PBP, was responsible for the purchase,
sale and safekeeping of the Partnership's temporary investments. This account
was maintained in accordance with the Partnership Agreement.
PSI owns 62,015 BUC$ at March 31, 1997.
The Players Club property (securing a $2,500,000 FMB in this Partnership)
also secures an FMB for $7,200,000 owned by Summit Tax Exempt L.P. III, of which
the general partners are either the same or affiliates of the General Partners
of this Partnership.
The original obligors of the Suntree, Players Club and River Run FMBs are
affiliates of the Related General Partner.
As of March 31, 1997, the original owners of the underlying properties and
obligors of the Pelican Cove, Loveridge and Sunset Downs FMBs have been replaced
with affiliates of the Related General Partner who have not made equity
investments. These entities have assumed the day-to-day responsibilities and
obligations of the underlying properties. Buyers are being sought who would make
equity investments in the underlying properties and assume the nonrecourse
obligations for each of the FMBs.
9
<PAGE>
SUMMIT TAX EXEMPT L.P. II
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(unaudited)
NOTE 4 - Contingencies
On or about October 18, 1993, a putative class action, captioned Kinnes et
al. v. Prudential Securities Group, Inc. et al. (CV-93-654), was filed in
the United States District Court for the District of Arizona, purportedly
on behalf of investors in the Partnership, against the Partnership, PBP,
PSI and a number of other defendants. On November 16, 1993, a putative
class action captioned Connelly et al. v. Prudential-Bache Securities Inc.
et al. (93 Civ. 713) , was filed in the United States District Court for
the District of Arizona , purportedly on behalf of investors in the
Partnership against the Partnership, PBP, PSI and a number of other
defendants. On January 3, 1992, a putative class action, captioned Levine
v. Prudential-Bache Properties Inc. et al.. (92 Civ. 52), was filed in the
United States District Court for the Northern District of Illinois
purportedly on behalf of investors in the Partnership against the General
Partners, PSI and a number of other defendants. Subsequently, the Related
General Partner was dismissed from the Levine litigation.
By order of the Judicial Panel on Multidistrict Litigation dated April 14,
1994, the Kinnes case, by order dated May 4, 1994, the Connelly case and by
order dated July 13, 1994, the Levine case, were transferred to a single judge
of the United States District Court for the Southern District of New York (the
"Court") and consolidated for pretrial proceedings under the caption In re
Prudential Securities Incorporated Limited Partnerships Litigation (MDL Docket
1005) (the "Class Action"). On June 8, 1994, plaintiffs in the transferred cases
filed a complaint that consolidated the previously filed complaints and named as
defendants, among others, PSI, certain of its present and former employees and
the General Partners. The Partnership was not named a defendant in the
consolidated complaint, but the name of the Partnership was listed as being
among the limited partnerships at issue in the case.
On August 9, 1995 PBP, PSI and other Prudential defendants entered into a
Stipulation and Agreement of Partial Compromise and Settlement with legal
counsel representing plaintiffs in the consolidated actions. The court
preliminarily approved the settlement agreement by order dated August 29, 1995
and, following a hearing held November 17, 1995, found that the agreement was
fair, reasonable, adequate and in the best interests of the plaintiff class. The
Court gave final approval to the settlement, certified a class of purchasers of
specific limited partnerships, including the Partnership, released all settled
claims by members of the class against the PSI settling defendants and
permanently barred and enjoined class members from instituting, commencing or
prosecuting any settled claim against the released parties. The full amount due
under the settlement agreement has been paid by PSI. The Levine and Connelly
cases were dismissed with prejudice as to the Prudential defendants by court
order dated October 25, 1996. The consolidated action remains pending against
the Related General Partner and certain of its affiliates.
On December 31, 1996, the Court issued a preliminary approval order (the
"Order") with respect to settlement (the "Related Settlement") of the Class
Action against the Related General Partner and certain of its affiliates.
Pursuant to the stipulation of settlement entered into with counsel for the
class on December 24, 1996, the proposed Related Settlement contemplates, among
other matters, the reorganization (the "Reorganization") of the Partnership and
two other partnerships co-sponsored by affiliates of the Related General Partner
and PBP.
The proposed Related Settlement and Reorganization are subject to objections
by the
10
<PAGE>
SUMMIT TAX EXEMPT L.P. II
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(unaudited)
NOTE 4 - Contingencies (continued)
BUC$holders and limited partners of the Partnership as well as each of the
other concerned partnerships and final approval of the Court after review of
the proposals at a fairness hearing.
Under the proposed Reorganization plan, the BUC$holders of the Partnership,
and Summit Tax Exempt Bond Fund L.P. and Summit Tax Exempt L.P. III, will
receive shares in a newly formed business trust. It is anticipated that the
shares will be allocated proportionately among the partnerships and their
respective investors based upon appraisals and other factors as supported by a
third-party fairness opinion. Detailed information about the proposed Related
Settlement and Reorganization will be sent to BUC$holders in the near future.
The terms of the Reorganization include, among other matters, the acquisition by
affiliates of the Related Capital Company ("RCC") of PBP's general partner
interest (the "PBP Interest"), transfer to the BUC$holders of one-half of the
PBP Interest, reduction of the sum of the aggregate annual fees currently
payable to both General Partners by 25%, filing an application to list the new
company's shares on an exchange and the creation of an infinite, as opposed to
finite, life-operating business.
In connection with the proposed Related Settlement and Reorganization, on
December 19, 1996, PBP and RCC entered into an agreement for the purchase by RCC
or its affiliates of the PBP Interest. The agreement is subject to numerous
conditions, including the effectiveness of the Related Settlement of the Class
Action and the approval of the sale and withdrawal of PBP as a general partner
of the Partnership by the Court.
Pending final approval of the Related Settlement, the Court's Order
prohibits class members (including the BUC$holders) from, among other matters,
(i) transferring their BUC$ unless the transferee agrees to be bound by the
Related Settlement; (ii) granting a proxy to object to the Reorganization; or
(iii) commencing a tender offer for the BUC$. In addition, the General Partners
are enjoined from (i) recording any transfers made in violation of the Order and
(ii) providing the list of investors in any of the partnerships which are the
subject of the Reorganization to any person conducting a tender offer.
There can be no assurance that the conditions to the closing of the proposed
Related Settlement and Reorganization will be satisfied nor as to the time frame
in which a closing may occur . In the event a settlement cannot be reached, the
Related General Partner believes it has meritorious defenses to the consolidated
complaint and intends to vigorously defend this action.
NOTE 5 - Subsequent Events
In May 1997, distributions of approximately $2,379,000 and $49,000 were paid
to the BUC$holders and General Partners, respectively, for the quarter ended
ended March 31, 1997.
On May 12, 1997, the Partnership loaned the obligor of the Players Club FMB
$280,000 to cover its shortfall on its 1996 real estate tax payment and to fund
a capital improvement account. The note will be self-amortizing at an annual
interest rate of 8% for a term of 48 months.
11
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Liquidity and Capital Resources
Summit Tax Exempt L.P. II (the "Partnership") has invested in sixteen
tax-exempt participating first mortgage bonds ("FMBs") issued by various state
or local governments or their agencies or authorities. The FMBs are secured by
participating first mortgage loans on multi-family residential apartment
projects.
At the beginning of the year, the Partnership had cash and temporary
investments of $3,849,000. After payment of distributions of $2,428,000,
principal payments received from loans made to properties of approximately
$33,000 and receipt of the net cash flow from operations of approximately
$2,960,000, the Partnership had approximately $4,414,000 in cash and temporary
investments at March 31, 1997. The first quarter distribution of $2,379,000
($.26 per BUC) was paid to BUC$holders in May 1997 from cash flow from
operations.
Effective January 1, 1997, forbearance agreements with respect to the
Suntree and Players Club FMBs were modified and extended due to a continuous
weak rental market and to ensure real estate tax payments and capital
improvements are made. Pursuant to the modification, the minimum pay rate for
Suntree was reduced to 6.5% and 7.5% for the periods January 1, 1997 through
June 30, 1997, July 1, 1997 through December 31, 1997, respectively. Thereafter,
the stated rate is to be reinstated. The minimum pay rate for Players Club was
reduced to 6.5% and 6.25% for the periods January 1, 1997 through January 31,
1997 and February 1, 1997 through December 31, 1997, respectively. Thereafter,
it is expected that the stated rate of 8% will be reinstated.
With respect to the Highland Ridge FMB and pursuant to terms of the
forbearance agreement, the developer has paid the first and second of three
annual installments towards the payment of delinquent taxes.
Effective as of January 30, 1997, pursuant to the terms of a forbearance
agreement entered into in August 1995, the obligor of the Sunset Downs FMB
transferred the deed to the underlying property to an affiliate of the Related
General Partner, who made no equity investment in the property but assumed the
day-to-day responsibilities of operations and obligations under the FMB.
With respect to the Sunset Downs FMB, the Partnership paid certain insurance
premiums on January 31, 1997 in the amount of approximately $92,000 as a result
of the forbearance agreement and transfer of the deed to the underlying property
to an affiliate of the Related General Partner. This loan was recorded in
operating income as a reduction of interest income from participating first
mortgage bonds because the Sunset Downs FMB is paying interest on a cash flow
basis.
A forbearance agreement with the owner of the Cedar Pointe property was
executed on February 1, 1997, which provided for a minimum pay rate of 7% per
annum effective September 16, 1996. Pursuant to the terms of the forbearance
agreement, it is envisioned that the FMB will be formally and permanently
modified to provide for a new base interest rate of 7% and a contingent interest
rate of up to 5% payable from 25% of cash flow or sale or refinancing proceeds.
In addition, the FMB modification will call for the discharge of accrued and
unpaid primary contingent interest, primary deferred interest, supplemental
contingent interest, supplemental deferred interest and construction period
deferred and contingent interest through September 15, 1996, whether payable
before, on, or after September 15, 1996. It is further expected that maturity of
the FMB will be extended to 2017 and the call date extended to 2006.
12
<PAGE>
The Partnership has entered into forbearance agreements on several FMBs and
may be required to extend these agreements or enter into new agreements in the
future. Such agreements may adversely impact liquidity; however interest
payments from FMBs are anticipated to provide sufficient liquidity to fund in
future years the Partnership's operating expenditures and distributions.
For a discussion of the proposed settlement of the Class Action relating to
the Partnership, see Note 4 to the financial statements.
Management is not aware of any trends or events, commitments or
uncertainties, which have not otherwise been disclosed that will or are likely
to impact liquidity in a material way. The Partnership's investments in FMBs are
secured by a Partnership interest in properties which are diversified by
location so that if one area of the country is experiencing downturns in the
economy, the remaining properties may be experiencing upswings. However, the
geographic diversification of the portfolio may not protect against a general
downturn in the national economy.
Results of Operations
Net income decreased approximately $163,000 for the three months ended March
31, 1997 as compared to 1996 primarily due to the reasons discussed below.
Interest income from FMBs decreased by approximately $164,000 for the three
months ended March 31, 1997 as compared to the corresponding period in 1996
primarily due to a reduction in the income recorded from the Highland Ridge FMB
as a result of a forbearance agreement for which a retroactive adjustment to
October 1995 was made in the fourth quarter of 1996 and a decrease due to an
insurance loan made to the owner of the underlying property of the Sunset Downs
FMB which was recorded as a reduction of income.
Interest income from promissory notes increased by approximately $4,000 for
the three months ended March 31, 1997 as compared to the corresponding period in
1996 primarily due to the $300,000 increase in the Shannon Lake loan in July
1996.
General
The determination as to whether it is in the best interest of the
Partnership to enter into forbearance agreements on the FMBs or, alternatively,
to pursue its remedies under the loan documents, including foreclosure, is based
upon several factors including, but not limited to, property performance, owner
cooperation and projected legal costs.
Certain property owners have, at times, supplemented the cash flow generated
by the properties to meet the required FMB interest payments. There can be no
assurance that in the future any property owner will elect to supplement
property cash flow to satisfy bond interest requirements, if necessary. No
property owner made supplementary payments during the three months ended March
31, 1997 and 1996.
13
<PAGE>
Property Information
The following table lists the FMBs the Partnership owns together with
occupancy rates of the underlying properties as of March 31, 1997:
<TABLE>
<CAPTION>
Annualized
Interest
Rate Paid Minimum
for the three Annual
Stated months ended Pay Rate at
Face Amount Interest March March
Property Location of FMB Occupancy Rate* 31, 1997* 31, 1997*
- - -------- -------- ----------- --------- -------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Bay Club Mt. Pleasant, SC $ 6,400,000 100.0% 8.25% 7.57% (D) 8.25%(D)
Loveridge Contra Costa, CA 8,550,000 93.2 8.00 5.17 (B)
The Lakes Kansas City, MO 13,650,000 98.0 4.87 4.87 4.87
Crowne Pointe Olympia, WA 5,075,000 96.2 8.00 8.00 8.00
Orchard Hills Tacoma, WA 5,650,000 92.0 8.00 8.00 8.00
Highland Ridge St. Paul, MN 15,000,000 92.5 8.00 7.25 7.25 (F)
Newport Village Tacoma, WA 13,000,000 89.2 8.00 8.22 (C) 8.00
Sunset Downs Lancaster, CA 15,000,000 90.0 8.00 4.33 (B)
Willow Creek Ames, IA 6,100,000 100.0 8.00 8.00 8.00
Cedar Pointe Nashville, TN 9,500,000 90.4 7.00 7.00 7.00
Shannon Lake Atlanta, GA 12,000,000 96.2 8.00 6.00 6.00 (F)
Bristol Village Bloomington, MN 17,000,000 94.7 8.00 8.38 (C)(E) 8.00
Suntree Ft. Myers, FL 7,500,000 93.6 8.00 6.84 6.50 (F)
River Run Miami, FL 7,200,000 92.5 8.00 8.00 8.00
Pelican Cove St. Louis, MO 18,000,000 94.9 8.00 7.50 (B)
Players Club(A) Ft. Myers, FL 2,500,000 78.4 8.00 6.42 6.25 (F)
------------
$162,125,000
============
*The annualized interest rate paid represents the interest recorded by the
Partnership while the stated interest rate represents the coupon rate of the FMB
and the minimum pay rate represents the minimum rate payable pursuant to the
applicable forbearance agreements, if any.
(A) Summit Tax Exempt L.P. III, of which the general partners are either the
same or affiliates of the General Partners of the Partnership, acquired the
other $7,200,000 of the Players Club FMB.
(B) Pay rate is based on the net cash flow generated by operations of the
underlying property.
(C) Includes receipt of deferred base interest related to
prior periods.
(D) The minimum pay rate on the FMB increased in increments from 6.0% in 1990
to 8.25% in 1997. The actual pay rate is adjusted as of the property's
fiscal year-end based on audited financial statements to no less than the
minimum pay rate.
(E) Includes receipt of primary contingent interest related to prior periods.
(F) The minimum pay rate on the FMB is scheduled to increase to the stated
interest rate over the remaining term of the FMB.
</TABLE>
14
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Incorporated by reference to Note 4 to the financial statements filed
herewith in Item 1 of Part 1 of the Registrant's Quarterly Report.
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information
Thomas F. Lynch, III ceased to serve as President, Chief Executive
Officer, Chairman of the Board of Directors and Director of Prudential-Bache
Properties, Inc. effective May 2, 1997. Effective May 2, 1997, Brian J. Martin
was elected President, Chief Executive Officer, Chairman of the Board of
Directors and Director of Prudential-Bache Properties, Inc.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
4(a) Partnership Agreement, incorporated by reference to Exhibit A to
the Prospectus of Registrant, dated July 7, 1986, filed pursuant to Rule 424(b)
under the Securities Act of 1933, File No. 33-5213.
4(b) Certificate of Limited Partnership, incorporated by
reference to Exhibit 4 to the Amendment No. 1 to Registration Statement on Form
S-11, File No. 33-5213.
10.(ao) Amended Forbearance Agreement for the Suntree First Mortgage
Bond dated December 1, 1996 (filed herewith).
10.(ap) Amended Forbearance Agreement for the Players Club First
Mortgage Bond dated December 1, 1996 (filed herewith).
27 Financial Data Schedule (filed herewith).
(b) Current Report on Form 8-K dated December 31, 1996, was filed on
January 10, 1997 relating to a preliminary approval order with respect to the
settlement of class action litigation.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SUMMIT TAX EXEMPT L.P. II
By: Related Tax Exempt Associates II, Inc.
A Delaware corporation, General Partner
Date: May 14, 1997 By: /s/ Alan P. Hirmes
----------------------------------
Alan P. Hirmes
Vice President
(Principal Financial Officer)
Date: May 14, 1997 By: /s/ Richard A. Palermo
----------------------------------
Richard A. Palermo
Treasurer
(Principal Accounting Officer)
By: Prudential-Bache Properties, Inc.
A Delaware corporation, General Partner
Date: May 14, 1997 By: /s/ Eugene D. Burak
----------------------------------
Eugene D. Burak
Vice President
17
[Letterhead of Summit Tax Exempt LP II]
December 1, 1996
Suntree at Fort Myers, Ltd.
c/o H/R Florida Associates, L.P.
625 Madison Avenue
New York, NY 10022
Gentlemen:
Suntree at Fort Myers, Ltd., a California limited partnership organized and
existing in the State of California (the "Developer"), is the Developer and
Owner of a 240-unit multifamily residential rental housing development known as
Suntree Apartments, located in Lee County, Florida (the "Project"). The cost
of acquiring, constructing, improving and equipping the Project was financed by
the Florida Housing Finance Agency (the "Issuer"), by the issuance of its
Multi-Family Housing Revenue Bonds, 1987 Series D (Suntree at Fort Myers
Project), in the Principal amount of $7,500,000 pursuant to a series of Bond
Resolutions adopted on September 13, 1985; September 17, 1985; October 15,
1985; and June 26, 1987.
The terms of the Bonds, the security therefor, the rights and remedies of the
holders thereof, and various other matters in connection therewith were
prescribed pursuant to a Trust Indenture between the Issuer and Southeast Bank,
N.A. (the "Trustee"), dated as of July 1, 1987 (the "Trust Indenture").
Proceeds of the Bonds were loaned to the Developer pursuant to a Loan Agreement
between the Issuer and the Developer dated as of July 1, 1987 (the "Loan
Agreement"), evidenced by the Developer's Promissory Note (the "Note") in the
amount of $7,500,000. The obligations of the Developer under the Loan Agreement
and the Note are secured by a Mortgage and Security Agreement, dated as of July
1, 1987, and various other loan documents defined in the Loan Agreement
(collectively, the "Loan Documents").
All of the Bonds issued pursuant to the Trust Indenture were purchased and are
owned as of this date by Summit Tax Exempt L.P. II ("Summit"), a limited
partnership organized and existing under the laws of the State of Delaware.
<PAGE>
Suntree at Fort Myers
December 1, 1996
Page Two
As of February 1, 1992, the Project's cash flow was inadequate to provide for
certain capital improvements required to be made and for certain other expenses
being incurred; accordingly, the Developer requested that a portion of the
Base Interest on the Note ("Base Interest"), required to be paid monthly in
accordance with the terms of the Trust Indenture and Bonds, be temporarily
deferred. The failure to pay any portion of the required Base Interest when due
would constitute an Event of Default pursuant to various provisions of the
Trust Indenture, Bonds and Loan Documents. Pursuant to Section 9.02(a) of the
Trust Indenture, Summit, as the single owner of the Bonds, is the designated
"Acting Party" with the sole authority to take actions in respect of any Event
of Default. In response to the Developer's request, the Developer and Summit
entered into a letter agreement dated as of February 1, 1992 (the "1992 Letter
Agreement"), whereby Summit agreed to forbear from enforcing its remedies under
the various default and remedies provisions of the Trust Indenture, Bonds and
Loan Documents (the "Remedies Provisions") based upon the payment of a portion
of the Base Interest, and on various other terms and conditions, all as set
forth therein. Pursuant to the 1992 Letter Agreement, certain portions of the
Base Interest which would have been due and payable between January 1, 1992 and
December 31, 1993, were deferred in accordance with the terms and conditions
thereof.
As of December 1, 1993, the Developer requested a continuation of Summit's
agreement to forbear from enforcing its remedies under the Remedies Provisions
upon the occurrence of further defaults for the non-payment of Base Interest
when due, from and after December 31, 1993. In response to the Developer's
request, the Developer and Summit entered into a second letter agreement dated
as of December 1, 1993 (the "1993 Letter Agreement") purusant to which certain
portions of the Base Interest which would have been due and payable between
January 1, 1994 and December 31, 1994, were deferred in accordance with the
terms and conditions thereof.
As of December 1, 1994, the Developer requested that Summit agree to forbear
from enforcing its remedies under the Remedies Provisions upon the occurrence
of further defaults for the non-payment of Base Interest when due, from and
after December 31, 1994, again conditioned on the payment of certain portions
of such interest when due. In response to the Developer's request, the
Developer and Summit entered into a third letter agreement dated as of December
1, 1994 (the "1994 Letter Agreement") pursuant to which certain portions of the
Base Interest which would have been due and payable between January 1, 1995
and December 31, 1995, were deferred in accordance with the terms and
conditions thereof.
As of December 1, 1995, the Developer requested that Summit agree to forbear
from enforcing its remedies under the Remedies Provisions upon the occurrence
of further
<PAGE>
Suntree at Fort Myers
December 1, 1996
Page Three
defaults for the non-payment of Base Interest when due, from and
after December 31, 1995, again conditioned on the payment of certain portions
of such interest when due. In response to the Developer's request, the
Developer and Summit entered into a fourth letter agreement dated as of
December 1, 1995 (the "1995 Letter Agreement") pursuant to which certain
portions of the Base Interest which would have been due and payable between
January 1, 1996 and December 31, 1996, were deferred in accordance with the
terms and conditions thereof.
As of this date, the Developer has requested that Summit agree to forbear from
enforcing its remedies under the Remedies Provisions upon the occurrence of
further defaults for the non-payment of Base Interest when due, from and after
December 31, 1996, again conditioned on the payment of certain portions of such
interest when due.
In addition, the parties desire to correct an error in Paragraph 2(e) of the
1994 Letter Agreement, dealing with the interest rate applicable to accrued and
unpaid Base Interest outstanding from time to time.
Accordingly, Summit and the Developer agree as follows:
1. Extension and Modification of "Time Period" and "Minimum Pay Rate."
-------------------------------------------------------------------
The "Time Period" and "Minimum Pay Rate" set forth in Paragraph 2(d) of
the 1994 Letter Agreement, as previously extended pursuant to the 1995
Letter Agreement, are further extended and modified as follows:
Time Period Minimum Pay Rate
----------- -----------------
01/01/97-06/30/97 6.5% per annum
07/01/97-12/31/97 7.5% per annum
01/01/98-thereafter 8.0% per annum
2. Interest on Unpaid Amounts.
---------------------------
Paragraph 2(e) of the 1994 Letter Agreement is amended by striking
"Section 7.10" and by substituting "Section 3.03(c)(1)" in lieu thereof.
<PAGE>
Suntree at Fort Myers
December 1, 1996
Page Four
Except as specifically extended and modified herein, Summit and the Developer
agree that all the provisions, terms and conditions of the 1994 Letter
Agreement, as extended by the 1995 Letter Agreement, are hereby ratified and
confirmed, and shall remain in full force and effect.
If the above accurately sets forth the extension and modification on which we
have agreed, please return to us five (5) copies of this letter executed by
you in the space provided below, at which time this letter shall constitute a
binding amendment to the 1994 and 1995 Letter Agreements.
Very truly yours,
SUMMIT TAX EXEMPT L.P. II
By: Related Tax Exempt Associates II, Inc.
a general partner
/s/ Alan Hirmes
By: ---------------------------------------
(Title)
Accepted and Agreed to as of the
18th day of December, 1996:
SUNTREE AT FORT MYERS, LTD.,
A California limited partnership
By: H/R FLORIDA ASSOCIATES L.P.,
a Delaware limited partnership,
a general partner
By: RELATED ADVANTAGED RESIDENTIAL ASSOCIATES, INC.,
a Delaware corporation, a general partner
/s/ Max Schlopy
By: ---------------------------------------------
Max Schlopy
Vice-President
[Letterhead of Summit Tax Exempt LP II]
December 1, 1996
Players CLub at Fort Myers, Ltd.
c/o H/R Florida Associates, L.P.
625 Madison Avenue
New York, NY 10022
Gentlemen:
Players Club at Fort Myers, Ltd., a California limited partnership organized
and existing in the State of California (the "Developer"), is the Developer and
Owner of a 288-unit multifamily residential rental housing development known as
Players Club Apartments, located in Lee County, Florida (the "Project"). The
cost of acquiring, constructing, improving and equipping the Project was
financed by the Florida Housing Finance Agency (the "Issuer"), by the issuance
of its Multi-Family Housing Revenue Bonds, 1987 Series C (Players Club at Fort
Myers Project), in the principal amount of $9,700,000 pursuant to a series of
Bond Resolutions adopted on September 13, 1985; September 17, 1985; October 15,
1985; and June 26, 1987.
The terms of the Bonds, the security therefor, the rights and remedies of the
holders thereof, and various other matters in connection therewith were
prescribed pursuant to a Trust Indenture between the Issuer and Southeast Bank,
N.A. (the "Trustee"), dated as of July 1, 1987 (the "Trust Indenture").
Proceeds of the Bonds were loaned to the Developer pursuant to a Loan Agreement
between the Issuer and the Developer dated as of July 1, 1987 (the "Loan
Agreement"), evidenced by the Developer's Promissory Note (the "Note") in the
amount of $9,700,000. The obligations of the Developer under the Loan Agreement
and the Note are secured by a Mortgage and Security Agreement, dated as of July
1, 1987, and various other loan documents defined in the Loan Agreement
(collectively, the "Loan Documents").
All of the Bonds issued pursuant to the Trust Indenture were purchased and are
owned as of this date by Summit Tax Exempt L.P. II and Summit Tax Exempt L.P.
III
<PAGE>
Players Club at Fort Myers
December 1, 1996
Page Two
(collectively referred to as "Summit") both of which are limited partnerships
organized and existing under the laws of the State of Delaware.
As of February 1, 1992, the Project's cash flow was inadequate to provide for
certain capital improvements required to be made and for certain other expenses
being incurred; accordingly, the Developer requested that a portion of the Base
Interest on the Note ("Base Interest"), required to be paid monthly in
accordance with the terms of the Trust Indenture and Bonds, be temporarily
deferred. The failure to pay any portion of the required Base Interest when due
would constitute an Event of Deafult pursuant to various provisions of the
Trust Indenture, Bonds and Loan Documents. Pursuant to Section 9.02(a) of the
Trust Indenture, Summit, as the single owner of the Bonds, is the designated
"Acting Party" with the sole authority to take actions in respect of any Event
of Default. In response to the Developer's request, the Developer and Summit
entered into a letter agreement dated as of February 1, 1992 (the "1992 Letter
Agreement"), whereby Summit agreed to forbear from enforcing its remedies under
the various default and remedies provisions of the Trust Indenture, Bonds and
Loan Documents (the "Remedies Provisions") based upon the payment of portions
of the Base Interest, and on various other terms and conditions, all as set
forth therein. Pursuant to the 1992 Letter Agreement, certain portions of the
Base Interest which would have been due and payable between January 1, 1992 and
December 31, 1993, were deferred in accordance with the terms and conditions
thereof.
As of December 1, 1993, the Developer requested a continuation of Summit's
agreement to forbear from enforcing its remedies under the Remedies Provisions
upon the occurrence of further defaults for the non-payment of Base Interest
when due, from and after December 31, 1993. In response to the Developer's
request, the Developer and Summit entered into a second letter agreement dated
as of December 1, 1993 (the "1993 Letter Agreement") pursuant to which certain
portions of the Base Interest which would have been due and payable between
January 1, 1994 and December 31, 1994, were deferred in accordance with the
terms and conditions thereof.
As of December 1, 1994, the Developer requested that Summit agree to forbear
from enforcing its remedies under the Remedies Provisions upon the occurrence
of further defaults for the non-payment of Base Interest when due, from and
after December 31, 1994, again conditioned on the payment of certain portions
of such interest when due. In response to the Developer's request, the
Developer and Summit entered into a third letter agreement dated as of December
1, 1994 (the "1994 Letter Agreement") pursuant to which certain portions of the
Base Interest which would have been due and payable between January 1, 1995 and
December 31, 1995, were deferred in accordance with the terms and conditions
thereof.
As of December 1, 1995, the Developer requested that Summit agree to forbear
from enforcing its remedies under the Remedies Provisions upon the occurrence
of further
<PAGE>
Players Club at Fort Myers
December 1, 1996
Page Three
defaults for the non-payment of Base Interest when due, from and
after December 31, 1995, again conditioned on the payment of certain portions
of such interest when due. In response to the Developer's request, the
Developer and Summit entered into a fourth letter agreement dated as of December
1, 1995 (the "1995 Letter Agreement") pursuant to which certain portions of
the Base Interest which would have been due and payable between January 1, 1996
and December 31, 1996, were deferred in accordance with the terms and
conditions thereof.
As of this date, the Developer has requested that Summit agree to forbear from
enforcing its remedies under the Remedies Provisions upon the occurrence of
further defaults for the non-payment of Base Interest when due, from and after
December 31, 1996, again conditioned on the payment of certain portions of such
interest when due.
In addition, the parties desire to correct an error in Paragraph 2(e) of the
1994 Letter Agreement, dealing with the interest rate applicable to accrued and
unpaid Base Interest outstanding from time to time.
Accordingly, Summit and the Developer agree as follows:
1. Extension and Modification of "Time Period" and "Minimum Pay Rate."
-------------------------------------------------------------------
The "Time Period" And "Minimum Pay Rate" set forth in Paragraph 2(d) of
the 1994 Letter Agreement, as previously extended pursuant to the 1995
Letter Agreement, are further extended and modified as follows:
Time Period Minimum Pay Rate
----------- -----------------
01/01/97-01/31/97 6.50% per annum
02/01/97-12/31/97 6.25% per annum
2. Interest on Unpaid Amounts.
---------------------------
Paragraph 2(e) of the 1994 Letter Agreement is amended by striking
"Section 7.10" and by substituting "Section 3.03(c)(1)" in lieu thereof.
Except as specifically extended and modified herein, Summit and the Developer
agree that all the provisions, terms and conditions of the 1994 Letter
Agreement, as extended by the 1995 Letter Agreement, are hereby ratified and
confirmed, and shall remain in full force and effect.
<PAGE>
Players Club at Fort Myers
December 1, 1996
Page Four
If the above accurately sets forth the extension and modification on which we
have agreed, please return to us five (5) copies of this letter executed by
you in the space provided below, at which time this letter shall constitute a
binding amendment to the 1994 and 1995 Letter Agreements.
Very truly yours,
SUMMIT TAX EXEMPT L.P. II
By: Related Tax Exempt Associates II, Inc.
a general partner
/s/ Alan Hirmes
By: ---------------------------------------
(Title)
SUMMIT TAX EXEMPT L.P. III
By: Related Tax Exempt Associates III, Inc.,
a general partner
By: /s/ Alan Hirmes
----------------------------------------
(Title)
Accepted and Agreed to as of the
18th day of December, 1996:
PLAYERS CLUB AT FORT MYERS, LTD.,
A California limited partnership
By: H/R FLORIDA ASSOCIATES L.P.,
a Delaware limited partnership,
a general partner
By: A General Partner: RELATED ADVANTAGED
RESIDENTIAL ASSOCIATES, INC.,
a Delaware corporation
/s/ Max Schlopy
By: ---------------------------------------------
Max Schlopy
Vice-President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial information extracted from the financial
statements for Summit Tax Exempt L.P. II and is qualified in its entirety by
reference to such financial statements
</LEGEND>
<CIK> 0000792924
<NAME> SUMMIT TAX EXEMPT L.P. II.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,114,246
<SECURITIES> 151,430,039
<RECEIVABLES> 910,719
<ALLOWANCES> 138,000
<INVENTORY> 0
<CURRENT-ASSETS> 11,178
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 155,086,943
<CURRENT-LIABILITIES> 485,709
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 154,216,915
<TOTAL-LIABILITY-AND-EQUITY> 155,086,944
<SALES> 0
<TOTAL-REVENUES> 2,757,147
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 434,852
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,322,295
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,322,295
<EPS-PRIMARY> .25
<EPS-DILUTED> 0
</TABLE>
